Abu Dhabi State-Owned Oil Company Adnoc has sealed a $4 billion midstream pipeline infrastructure deal with BlackRock, the world's largest asset manager, and private equity firm KKR & Co.
The Middle East national oil company said that the transaction includes the creation of Adnoc Oil Pipelines, which will lease Adnoc's interest in 18 pipelines and give rights to transport crude and condensates from Adnoc's onshore and offshore concessions over 23 years.
BlackRock and KKR will form a consortium to hold a 40% stake in Adnoc Oil Pipelines, while Adnoc Infrastructure, a fully-owned Adnoc subsidiary, will retain the remaining 60%. Adnoc estimated its proceeds at about $4 billion.
Sovereignty over the pipelines and management of pipeline operations remain with Adnoc. The transaction will result in upfront proceeds of approximately $4 billion to Adnoc and is expected to close in Q3 2019, subject to customary closing conditions and all regulatory approvals.
BlackRock and KKR’s long-term investment underlines the attractiveness of Abu Dhabi and the UAE as a rapidly emerging investment destination for international capital. This transaction marks the first time that leading, global institutional investors have deployed capital into key midstream infrastructure assets of a national oil company in the Middle East.
Dr. Sultan Al Jaber, UAE Minister of State and Adnoc Group CEO, said: “The level and sophistication of the investors that we are attracting as financial partners to invest, alongside Adnoc, in these select pipeline assets is a clear reflection of the UAE’s stable, attractive and reliable investment environment. It also demonstrates the global investment community’s validation of Adnoc’s progressive and smart approach to unlocking value from its portfolio of assets while retaining control over their ownership and operation.”
In conjunction with this transaction, Adnoc is laying the groundwork for additional infrastructure-related investment opportunities with institutional investors. Adnoc’s 60% equity stake in Adnoc Oil Pipelines will be held through Adnoc Infrastructure LLC, a 100% Adnoc-owned subsidiary, which also holds Adnoc’s 100% stake in Abu Dhabi Crude Oil Pipeline (ADCOP).
In time, Adnoc Infrastructure LLC is expected to add further select Adnoc infrastructure assets and become the key vehicle for a new and innovative Adnoc infrastructure investment platform.
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